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Swiss Banks at the Losing End with Flight of Offshore Accounts

Published

9 years ago

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Swiss National Bank

[vc_row][vc_column][vc_column_text]~Rashme Sehgal

There has been a large flight of capital from Swiss banks even prior to the introduction of the Automatic Exchange of Common Information (AECI) from 2018 signed by over 50 countries who are members of the Organisation for Economic Co-operation and Developments (OECD).

The Swiss banking system has paid a heavy price for handling these unaccounted for offshore deposits especially since several of the smaller Swiss banks had specialised in handling such deposits. The blanket of secrecy surrounding Swiss banking transactions had ensured could they look after deposits of largely unaccounted wealth from well-heeled clients across the globe including India. But this is not going to be the case any longer.

Pressure on the Swiss government to provide details of all account holders has resulted in the outflow of millions of dollars of deposits from these banks thereby causing many of the smaller Swiss banks to shut shop. One such high profile Swiss bank that was forced to file for bankruptcy was Hottinger and Cie which was founded in 1786.

A KPMG study showed that 30 per cent of private banks had recorded losses in 2014-15 which resulted in several thousand bankers being laid off from their jobs.

“The smaller private banks dealing with off shore accounts posted huge losses and the result was that bankers handling these account lost their jobs under the restructuring process,” pointed out Louis Tari, a Geneva-based banking and tax advisor.

“With the introduction of the AECI, information of all non-Swiss residents belonging to the OECD countries will be automatically sent to the federal tax authorities in Berne who in turn will despatch this information to the relevant countries. The authorities in these countries can in turn check if the account holder has declared his income or not,” Tari added.

Zurich based banker Hanspeter Baumgartner pointed out, “What is very significant is that Swiss banks have frozen all accounts of account holders with ‘black’ money informing these holders that they should either regularise their account in their country or else their asset will be frozen. The flip side is that Swiss nationals who had accounts in the Bahamas or in Panama have had to declare their accounts.”

“This has seen an influx of francs into Switzerland but the amount is not very large,” Baumgartner added.

The amount of money of Indian national in Swiss banks has been steadily declining and in 2016 amounted to a mere Rs 4482 crore according to data released by Switzerland’s central bank, the Swiss National  Bank. In 2015, the money deposed was Rs 8135 crore while in 2014 it was Rs 12,350 crore.

The figures being projected by the Indian government that billions of dollars had been stashed in Swiss banks by Indian citizens was largely overstated, analysts believe, as Switzerland never saw such massive deposits from any country.

Nathalie Bersier, a lawyer who works as a consultant for Swiss investments in India, said, “From 2009,  the Indian government has been highlighting the issue of black money without realising that the easiest thing to do  is for a client to close a bank account and transfer the money out. Such a flight of capital has already occurred.”

Bersier believes, “In Switzerland, two years ago the perception was that Indian assets were between $ 900 million to $4 billion. Today I would say, the amount would be less than even $900 million.”

“More than half the undeclared money from India that was stashed in Swiss banks has been moved to Dubai and Singapore from where it would have been invested in real estate, gold or re-entered India through the hawala route,” Bersier maintains.

Former Swiss state secretary for International Financial Matters Jacques de Watteville who had visited India in 2016 to negotiate with his counterparts in the Ministry of Finance had refused to hazard a guess about just how much money has been moved out of Swiss banks to be invested in Dubai or Singapore. “There are no official figures on the assets transferred out of Switzerland,” says Watteville.

While in India he had emphasised that, “Combating the menace of black money and tax evasion is also our shared priority. We discussed the need for an early and expeditious exchange of information to bring to justice the tax offenders.”

Many Indian analysts believe some of this money has been routed to the US with the US government actively encouraging foreigners to deposit money in US banks, no questions asked. Some US states and cities have emerged as veritable tax havens. 

South Dakota, to cite an example, has been described by some analysts as the ‘new Switzerland’ and mention of its role as a tax haven was emphasised in the Panama Papers which highlighted that US offshore assets remain anonymous.

The city of Delaware is also said to be another tax haven with over one million registered entities claiming to operate from there.

The fact is that while international disclosure rules comprising the AECI  have been accepted  by the OECD countries, thhe US has refused to accept them and is not a signatory to it. The US NGO Tax Justice Network has pointed out how the US does not practise what it preaches.

In fact, a Swiss financial analyst on condition of anonymity, has accused the US of having crushed Swiss banks. Since trusts can operate as shell companies in some US states, it is ironical that a Swiss trust company has gone ahead and opened an office in South Dakota. The analyst feels that some of the flight of capital from Switzerland has ended up in the US.

This is because while non-US banks and financial institutions across the world have to reveal American account details, this is not the case with US deposits by offshore account holders.

Bersier does not see too much emerging from the Federal Council consultations with the Indian government on the need to detect, recover and repatriate illegal deposits.

“The key issue is what pressure the Indian government can exert on the Swiss government,” says Bersier. “The US threatened to close all Swiss banks operating in the US which led to the Swiss immediately signing a treaty with the US and UK. There are no Swiss banks operating in India.”

On the subject of the AEOI Information between the Swiss and Indian governments expected to be operationalised by 2018, she remains equally cynical.

Erecting the AEOI platform is all very well, she feels, but it is too little too late. Berseir believes that by the time it becomes operational, all the illegal deposits will have been moved out. There are any number of countries where this money can be moved to.

While some signatories of the AEOI are committed to sharing information from 2017, others will start providing information from 2018. Till then, we have to wait and watch.[/vc_column_text][/vc_column][/vc_row]

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Trump says Iran getting more serious in talks, no decision yet on major strikes

Donald Trump says Iran is becoming more serious in negotiations with the US but insists no decision has been taken on launching major military strikes against Tehran.

Published

2 days ago

on

July 25, 2026

By

Donald Trump

US President Donald Trump has said he has not yet decided whether to authorise major military strikes against Iran, stating that Tehran has become “more serious” in its negotiations with Washington even as tensions between the two countries remain high.

Speaking to reporters in the Oval Office on Friday, Trump said discussions with Iran were continuing and suggested diplomatic efforts were showing signs of progress.

“We’re talking to them right now. I think they’re getting more and more serious as the days go by,” Trump said, adding that no final decision had been taken on launching military action.

Trump says diplomacy remains an option

Trump said the United States remained prepared for military action if required but indicated that ongoing talks could still lead to an agreement.

“We’re locked and loaded and ready to go. But we’re talking to them, so I think while we’re talking, we’ll see what comes of it. I believe they’re very serious. They should be,” he said.

The US President also warned that Iran would face a “much higher level” of strikes if negotiations failed, while reiterating that preventing Tehran from developing a nuclear weapon remained his key red line.

The United States has said its military operations are aimed at preventing Iran from closing the strategically important Strait of Hormuz. Iran, meanwhile, has carried out retaliatory strikes on US bases, with four American service members reported killed.

Reports claim Trump discussed large-scale military operation

Trump’s remarks came after media reports suggested he met senior advisers to discuss the possibility of a large-scale military operation against Iran. Another report said he was considering a “massive attack”, although Trump did not confirm those reports during his interaction with journalists.

He also acknowledged that the prolonged conflict, which he had earlier expected to last only a few weeks, was approaching its fifth month and had become a political challenge ahead of the US midterm elections scheduled for November.

Trump issues warning over support for Iran

Trump also addressed reports claiming that Russia and China were providing intelligence or military support to Iran. He said both Chinese President Xi Jinping and Russian President Vladimir Putin had assured him they would not arm Tehran.

“I think they wouldn’t want to have me disappointed,” Trump said.

In a separate post on his Truth Social platform, Trump warned Moscow and Beijing against supplying weapons to Iran, saying such a move would not be in their interests.

He further stated that Xi had assured him during their meeting in Beijing in May that China would not provide weapons to Iran, while Putin had conveyed a similar position despite the ongoing war in Ukraine.

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India News

For second time, US strikes ship with Indian crew near Strait of Hormuz

Published

5 days ago

on

July 22, 2026

By

Strait of Hormuz

The United States Central Command (CENTCOM) has said that an oil tanker carrying Indian crew was drifting with its engine switched off near the Strait of Hormuz before it was struck by US forces.

A CENTCOM spokesperson said the vessel had stopped due to engine failure and was drifting after its crew repeatedly sought additional time to carry out repairs. US officials said the tanker was struck only after it failed to comply with directives issued by US forces enforcing a blockade on vessels allegedly transporting Iranian oil. The military said the strike was aimed at disabling the ship by targeting its engine room rather than sinking it.

The incident involved a tanker carrying Indian seafarers near the Gulf of Oman, close to the Strait of Hormuz, one of the world’s busiest maritime trade routes. The strike triggered a fire onboard, prompting rescue efforts by Omani authorities and maritime agencies. Indian authorities closely monitored the situation and coordinated with local officials regarding the welfare of the crew members.

The incident has drawn concern in India, with the government emphasising the safety of Indian nationals working aboard commercial vessels in the conflict-hit region. The Ministry of External Affairs has remained in touch with the authorities concerned as tensions between the United States and Iran continue to pose risks to international shipping.

In June, three Indian sailors were killed in a US strike on another oil tanker. The Strait of Hormuz handles a significant share of the word’s oil trade, and the latest incident has renewed concerns over the security of merchant vessels operating in the region. Maritime experts have warned that escalating hostilities could further disrupt commercial shipping and endanger civilian crews navigating one of the world’s most strategically important waterways.

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Latest world news

Trump announces phased tariff of up to 200% on generic drug imports, India may face impact

US President Donald Trump has announced a phased tariff plan on imported generic medicines, raising duties to 200% after three years, a move that could affect India’s pharmaceutical exports.

Published

5 days ago

on

July 22, 2026

By

Donald Trump

The United States has announced a phased tariff plan for imported generic medicines that could have implications for pharmaceutical exporters, including India. US President Donald Trump said the policy is intended to encourage companies to shift generic drug manufacturing to the United States by imposing steep tariffs after a two-year transition period.

The announcement is particularly important for India, one of the world’s largest suppliers of affordable generic medicines and a major exporter to the US market.

Trump outlines phased tariff plan

In a post on his Truth Social platform, President Trump said the new policy will take effect from August 1, 2026. Under the plan, imported generic medicines will continue to attract zero tariffs for the first two years.

Beginning in the third year, the tariff will increase to 100%, before rising further to 200% thereafter.

Trump said the measure is designed to encourage pharmaceutical companies to establish manufacturing facilities in the United States instead of relying on imports.

He added that companies choosing not to invest in US-based production during the transition period would face the higher tariff rates. According to Trump, the existing policy governing patented, branded and innovative medicines will remain unchanged.

Why India could be affected

India is widely regarded as the “pharmacy of the world” because of its large-scale production and export of generic medicines.

Indian generic drugs account for nearly 40% of the US generic medicine market by volume. According to a Global Trade Research Initiative (GTRI) report, India exported pharmaceutical products worth USD 9.7 billion to the United States during the 2024-25 financial year, representing around 38% of the country’s total pharmaceutical exports of USD 25.8 billion.

However, the immediate impact of the newly announced tariff policy on Indian pharmaceutical companies remains uncertain.

Existing trade agreement and industry concerns

India and the United States struck a trade pact in February that states India would receive negotiated outcomes regarding generic pharmaceuticals and pharmaceutical ingredients.

Despite that provision, previous tariff threats by Trump had already raised concerns within the pharmaceutical industry over the future of affordable medicine exports from India.

Indian pharmaceutical companies supply a wide range of generic medicines used to treat conditions including hypertension, diabetes, depression, cancer, infectious diseases and mental health disorders.

According to a Financial Post report cited in the source material, around 65% of birth control pill prescriptions in the United States during 2024 were manufactured by two India-based companies — Glenmark Pharmaceuticals Ltd. and Lupin Ltd.

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